An early version of President Joe Biden’s American Rescue Plan called for raising the federal minimum wage from $7.25 an hour to $15 an hour. The proposal was cut from the final law.
But raising the minimum wage to $15 an hour would still fall short of covering the average US family’s annual expenses.
It would take one $15 an hour employee 506 eight-hour shifts — just under two years if working every weekday — to earn what the average US family spends in a year, according to a USAFacts analysis of data from the Internal Revenue Service, Census Bureau, and the Bureau of Labor Statistics (BLS).
The average US family, defined here as the middle 20% of income earners spent $60,777 on everything from healthcare (25% of spending) to foreign travel (1% of spending) in 2018, the most recent data available. This excludes taxes and spending associated with government benefits. Seventy-one percent of families in this income group are primarily single-earner households.
It is a nationwide truth that a $15 an hourly minimum wage would not be enough for a single-income-earner household to cover the average family's annual expenses. For example, the average Mississippi family spent $44,071 in 2018, the lowest amount of any state. One person earning $15 an hour would take 367 eight-hour shifts — just over 73 workweeks — to earn that much.
The current federal minimum wage is $7.25 an hour, with 31 states having higher rates. Eight states and Washington, DC, have or will have a $15 an hour minimum wage. In Washington, DC, the average family spent $82,855, or 88% more than the average Mississippi family. For one $15 an hour employee, it would take 690 workdays —138 weeks or over 2.5 years — to make this amount.
In 2020, 73.3 million hourly workers were paid a median rate of $16.36 an hour, according to the BLS. About 1.1 million or 2% of hourly workers earned $7.25 per hour or less. At the current federal minimum, it would take more than four years for one person to cover the expenses of an average American family. The federal minimum wage does not apply to companies with less than $500,000 in business. Exceptions also apply to certain workers, including full-time students and tipped employees.
Learn more about employment, wages, and income by visiting the data section.
Methodology: The spending of an average family in each state is based on an analysis that combined data from the Census Bureau, Internal Revenue Service, and other sources, including the Bureau of Labor Statistics’ Consumer Expenditure Surveys. In each geographic area, the spending amounts represent median expenditures of family units — excluding families that include older people who receive benefits like Social Security and Medicare — in the middle 20% of income earners in that area. The calculations in this report and accompanying visualization exclude personal taxes and government transfers.
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